Independent School Tax Changes: Average Fees Set To Rise 4.5% From September

Independent school fees are expected to climb again for the 2026-27 academic year as schools absorb VAT, higher employment costs and the loss of business rates relief. London families face some of the country’s highest charges.

Average private school fees are set to rise by 4.5% from September, according to a Telegraph analysis, adding another above-inflation increase for families already paying substantially more following the introduction of VAT.

The newspaper said the rise follows an average 17% jump during the previous year. It attributed the latest increases to what the independent school sector has described as a “triple whammy”: VAT on fees, higher employer National Insurance contributions and the removal of charitable business rates relief.

The most significant of the independent school tax changes took effect on 1 January 2025, when education and boarding services supplied by private schools became subject to VAT at the standard 20% rate. The charge also applies to relevant advance payments made from 29 July 2024 for terms beginning in January 2025 or later.

A 20% VAT rate does not automatically mean every school must raise its prices by the full amount. Schools can reclaim VAT on qualifying costs, while some have reduced their underlying fees or absorbed part of the charge. The government previously estimated that the average net VAT liability would be closer to 15% of fee income, although the effect varies between schools.

Private schools with charitable status in England also lost their entitlement to 80% charitable business rates relief on 1 April 2025. Government analysis estimated that 1,024 schools would lose the relief, producing an average additional business rates cost of £308 per pupil during the 2025-26 financial year. Schools mainly educating pupils with Education, Health and Care Plans can retain the relief in qualifying circumstances.

Employment costs increased separately from 6 April 2025. The employer National Insurance rate rose from 13.8% to 15%, while the annual salary threshold at which employers begin paying it fell from £9,100 to £5,000. The Department for Education introduced additional funding for maintained schools and academies to meet the increase, but its grant scheme does not cover mainstream independent schools.

London families are particularly exposed because fees in the capital are already the highest in the country. The Independent Schools Council’s 2026 census put the average London day-school fee at £7,580 per term before VAT, compared with a UK-wide day-school average of £6,155. The council found that underlying fees rose by an average of 4.4% between January 2025 and January 2026, excluding VAT and nursery charges.

Applying a further 4.5% rise to that London average would take the underlying termly fee to about £7,921. After 20% VAT, that would be approximately £9,505 per term, or £28,516 across three terms. This is an illustration rather than a forecast for any individual school, and it excludes expenses such as meals, transport, uniforms, trips and extracurricular activities.

The wider impact remains disputed. Department for Education figures show that the number of pupils at independent schools in England fell by 3.8% to 560,300 in January 2026, while the total school population fell by 1.2%. The department said demographic changes, including falling birth rates, were also affecting enrolment.

Ministers have argued that predictions of state schools being overwhelmed have not materialised. In London, 94% of secondary applicants and 98% of primary applicants received an offer from one of their six preferred schools for September 2026, while applications fell in Hammersmith and Fulham and Kensington and Chelsea compared with the previous two years.

The VAT policy remains in force, although a further legal challenge is pending. The Supreme Court has scheduled a hearing for 1 and 2 December 2026 after allowing an appeal by religious schools, pupils and parents who argue that the measure breaches human rights protections. Until a judgment is delivered, schools and families must continue to account for VAT and the other tax changes when planning future fees.